Why You Need Process For Digital Transformation
I recently spoke with Kevin De Pree, vice-president of Rand Group, to discuss why organizations are diving into digital, the common challenges related to digital transformations, and ways to help overcome institutional barriers that stymie so many digital efforts.
What are the catalysts that start organizations on their digital transformation journey?
There are several reasons organizations start their digital transformations—ranging from creating sustainable growth by better allocating the time of the existing staff to finding new product or market opportunities. Whatever the explicit reason though, it typically boils down to one or more of these three reasons:
decrease costs, and
For example, one oil & gas client conducted a digital undertaking to create a digital “field ticket”, their invoice. Previously approval for invoice payments required a physical signature on paper from the customer. There were several benefits to digitizing the field tickets. Digitized information couldn’t get lost, it created more control over the timing of payments dramatically reducing Days Sales Outstanding (DSO), and it reduced job closeout cycle time. While the initial reason for the project was reduce paper and digitize information, the drivers behind it are reduce risk (both in losing the paperwork and in managing the payout schedule) and reducing costs by improving cycle time.
In addition to these three drivers, organizations are looking for ways to better leverage their existing staff with operational efficiencies. This driver has been the major one we’ve seen over the last two to three years and has been a result of labor shortage of experienced resources.
You mentioned that digital efforts are difficult to achieve. Where do organizations typically go wrong with their digital transformation efforts?
Most organizations are not designed for digitalization. They suffer from organizational silos, complex processes, and fragmented systems. This complexity and fragmentation mean they are typically only looking at one piece of an end-to-end process when they conduct digital projects, which ultimately makes it difficult to make improvements with the customer—either external or internal—experience in mind. Also, because they are looking at their pre-existing processes their automation efforts digitize the process as is, including unnecessary complexities or inefficiencies.
What roles does process management play in digital transformations?
Process management is a key component of successful digital transformation. This makes sense given that two of the major roadblocks are directly related to process—digitalizing as is complex processes and organizational silos. Relying solely on Subject Matter Experts (SMEs) for your digital projects comes with a price. Though they have invaluable understanding of the work involved, they still have a siloed perspective and their own biases about what should or shouldn’t change.
Process management champions are focused on designing and implementing processes that span functions. Process management serves as a neutral, third-party that represents the organization as a whole and can help the SMEs and project participants see the entire end-to-end process. Their consultative skills are also invaluable in bridging the gap between the goals and perspectives of the project team members. Additionally, process management champions can move the focus from incremental improvements by asking questions like “why are you doing it that way”.
In your experience is change management different for digital transformation work?
You cannot separate change management from digital transformation. Because digital work changes how people work, including the restructuring of their processes, you have to invest the time and energy into helping them through the transformation.
One place I see a change barrier is with the misunderstanding that there will be an initial round of inefficiency when you introduce digital components. There are multiple ways to explain this phenom in change management methodologies. For example, there is the change curve—which plots out the impact on productivity through the five typical stages of change.
My personal favorite is the four states of confidence which looks at the cycle of competence and awareness (or consciousness) throughout change.
Unconsciously competent—before the change most employees are competent at the execution of their tasks without having to consciously think about them.
Unconsciously incompetent—when you start to introduce a new process or technology they initially have a dip in productivity and are initially frustrated but not fully cognizant of how different it is from how they previously worked.
Consciously incompetent –employees become acutely aware of the differences in the execution of their work with the new technology and how different it is to what they did before. This is typically the point of greatest frustration.
Consciously competent—employees begin to gain competency with executing their tasks through the new tool, but still must think through the steps. However, once they get to this point their resistance and frustration start to reduce.
Finally, employees get to the goal of the change and reset back at unconsciously competent with the new way of executing their work.
The key is—it doesn’t matter which method you use—but set the stage with these cycles of emotions and dips in productivity at the beginning of the project. This approach helps provide context and prepare people with what they will experience as they move through the change journey. Which ultimately helps them move through the disruptive, low-productivity phases quicker and reduces the likelihood that they will just give up and try to go back to the way they did things before.
For more information on this topic and insights on how to address these limitations, check out the full interview, or join us on Thursday, August 29th at 11:00 a.m. CDT for “Planning Your Digital Transformation Journey ”, where Kevin will discuss key considerations for planning an effective digital transformation journey, including:
- Where are we going, or what is the goal of the project?
- Who is going to be in the car for the journey, i.e. who is the transformation team?
- Where is everyone sitting in the car, what are the team’s roles and responsibilities?
- What are the major milestones you are trying to accomplish on your way to the destination?
For more process and performance management research and insights follow me on twitter at @hlykehogland or connect with me onTweet